The LONG BASE pattern is a period of churning and consolidation during which the stock is being accumulated. It is also a period when the stock is out of favor and public interest is very low. You should look for companies that have relatively solid fundamentals that are either in this basing phase or have just broken out.

The basing range can be wide enough where you can "work the range" -- buying stock at the bottom and selling half the position at the top of the range, then reinvesting the profits again at the bottom of the range. This allows the accumulation of a substantial position prior to the breakout.

Once the price breaks out of the range, a BUY Signal is rendered and the growth phase begins.

This is probably the most promising and profitable pattern that an investor can identify, and it happens again and again over a wide range of stocks.

In the above example you can see that the stock had a very rapid growth phase followed by an equally rapid expired growth phase, finally entering a very long basing phase. In fact, since 1988 it has passed through three progressively higher basing stages, and could be ready to break out and enter a new growth phase. Failing a breakout, it is likely that price will drift back toward the bottom of the range (there is good support at 6). Time will tell.

Another aspect of this chart that is fairly obvious is that price movement in the basing range has formed a ROUNDED BOTTOM, which is a bullish configuration showing that buyers, after gradually losing control from 1983 to 1991 are gradually taking control again. In any case, a breakout above the resistance at 9 needs to occur to confirm that the basing period is over.

In truth there has been considerable price appreciation (from 2 to 9) during the base forming; but, the technical potential is that price will one day return again to the 1981 highs.

In the above example you can see that the stock had a very rapid growth phase followed by an equally rapid expired growth phase, finally entering a very long basing phase. In fact, since 1988 it has passed through three progressively higher basing stages, and could be ready to break out and enter a new growth phase. Failing a breakout, it is likely that price will drift back toward the bottom of the range (there is good support at 6). Time will tell.

Another aspect of this chart that is fairly obvious is that price movement in the basing range has formed a ROUNDED BOTTOM, which is a bullish configuration showing that buyers, after gradually losing control from 1983 to 1991 are gradually taking control again. In any case, a breakout above the resistance at 9 needs to occur to confirm that the basing period is over.

In truth there has been considerable price appreciation (from 2 to 9) during the base forming; but, the technical potential is that price will one day return again to the 1981 highs.